New Delhi: Prime Minister Narendra Modi launched the Rs16,320-crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya, on Monday evening to provide electricity connections to over 40 million families in rural and urban areas by December 2018. Here are some frequently asked questions or FAQs about the scheme.

What is the scheme all about?

The scheme funds the cost of last-mile connectivity to willing households to help achieve the goal of lighting every household by 31 December 2018.

Why was it launched?

Despite the government’s aggressive village electrification programme, the Deen Dayal Upadhyay Gram Jyoti Yojana launched in July 2015, under which 78% of 18,000 villages have been electrified, it was realised that the problem of electricity ‘access’ wasn’t resolved. A village is declared to be electrified if 10% of the households are given electricity along with public places such as schools, panchayat office, health centres, dispensaries and community centres. With a large number of household still remaining without access to electricity, the scheme aims at ensuring the coverage of households as opposed to only villages.

It was seen that the electricity distribution companies (discoms) don’t want to supply to the villages even if the electrification has taken place. By providing electricity access to all households with prepaid and smart meters, demand will be created which in turn will force the discoms to supply to these villages.

Any other benefits?

The scheme will help India, the world’s third-largest energy consumer after the US and China, to help meet its global climate change commitments as electricity will substitute kerosene for lighting purposes. Lighting in turn will also help in improving education, health, connectivity with the multiplier effect of increased economic activities and job creation.

Is it a scheme that entails subsidy payout?

No. With no subsidy component for monthly electricity consumption, the Gram Panchayat and public institutions in the rural areas will be authorised to carry out billing and collection tasks which have been pain points for the discoms.

States have also been provided with an incentive of 50% of their loan being converted to grants, if the electrification targets are met by 31 December 2018.

How will it work?

To ensure on-the-spot registration, mobile applications will be used. While free connections will be provided to below poverty line (BPL) households, even those not covered under this category can avail it by paying Rs500 in 10 instalments of Rs50 each along with their monthly bill.

For those household where the national electricity grid can’t reach, households will be provided with solar power packs along with battery banks. State-run Rural Electrification Corp. is the nodal agency for the scheme.

How will the beneficiaries be identified?

The beneficiaries for free electricity connections will be identified using Socio Economic and Caste Census (SECC) 2011 data.